One in 10 people retiring this year will empty their pension pot in one lump sum​.

More than a third want cash to splash on a holiday, while a quarter will spruce up their home and a fifth will gift money to children or grandchildren.

A study by pensions firm Prudential into the financial plans of those giving up the nine to five grind in the year ahead also reveals that one in five will get slapped with hefty tax bills as they will be withdrawing more than their 25% tax free lump sum.

Savers are not necessarily blowing all of their cash as more than two-thirds plan to invest in other areas such as property, a savings account or an investment fund.

What people plan to spend their pension on

Source: Prudential

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Since the pension freedom were introduced in April 2015, giving savers control over their money, more than 1.1million people aged 55 and over have withdrawn a whopping £15.744billion in flexible withdrawals from pensions.​

Government figures estimate £2.6billion was paid in tax by those taking advantage of the freedoms in 2015/16 and 2016/17 tax years with another £1.1billion raised in the 2017/18 tax year.

Stan Russell, retirement income expert at Prudential, said: “Pension freedoms allow savers to have the flexibility on how and when to spend their money without being penalised by the tax system but it is worrying that so many will withdraw than the tax-free lump sum limit.

”The risk is even greater for those who are taking all their pension fund in cash. They not only face paying more tax than they have to but also put their long-term retirement income security at risk.”